I think I see the problem when you use > to redirect the output to text file in Powershell it saves it using Unicode and that's why when you attempt to read the file via python you don't get the desired

In Emacs it looks like the file contains the proper characters, and I don't see the extraneous spaces and null characters etc. The file was generated as redirected output from a script run in PowerShell on Windows 7. When I read in the file and print out every character and it's ascii code, I can see that, for some reason, there are apparently null characters in between the ascii letters.

I don't know how those extra nulls got there, as it was a python file that generated the output as they were simple print statements. You can see that each character is quoted for identification, followed by it's ascii code.

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I think I see the problem when you use > to redirect the output to text file in Powershell it saves it using Unicode and that's why when you attempt to read the file via python you don't get the desired result !
To change the output file encoding you can redirect the output like this

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